Stock futures surge despite job losses

STMicro, PeopleSoft warnings weigh on chips, software

By

EmilyChurch

LONDON (CBS.MW) - U.S. stock futures held onto most of their gains, as pre-open investors preferred to focus on news that coalition forces took control of Baghdad airport that thousands of Iraq's elite Republican Guard had surrendered, rather than the much weaker than expected jobs data.

Meanwhile, sentiment for tech stocks was tepid after two March quarter warnings on delayed orders in the software and semiconductor sectors surfaced overnight.

June S&P futures traded 10.00 higher to 883.30, which was about 6 points above fair value, according to figures provided by HL Camp & Company. Nasdaq 100 futures were up 8.00, or about 7 3/4 points above fair value, at 1,075.00.

The "Diamonds"
DIA, +0.72%
a tracking stock for the Dow Jones Industrials Average
DJIA, +0.72%
rallied 91 cents to $83.28.

The U.S. Labor Department said non-farm payrolls declined by 108,000 jobs, worse than expectations of a drop of around 38,000, following a 357,000 decline in February. The unemployment rate was unchanged at 5.8 percent. See Economic Report.

Job losses were widespread through the economy. Manufacturing lost 36,000 jobs, while construction added back 21,000. Retail lost 43,000 jobs, temp help services lost 48,000 and government lost 40,000.

The aggregate number of hours worked in the economy rose 0.3 percent.

Events in Iraq continued to impact. The dollar gained vs. euro and North Sea Brent crude futures eased amid reports that U.S. forces have taken control of Baghdad international airport on Friday. See full story on war in Iraq.

May crude futures dropped $1.07 to $27.90 a barrel. The crude contracts declined amid reports U.S. forces on Friday took control of Baghdad airport. Lower crude prices bolstered European stocks with Germany, France and U.K. indexes higher. See European Markets

The dollar rose 0.5 percent versus the euro to $1.0705 and 0.5 percent against the yen to 119.98.

STM, PSFT warn on orders

STMircoelectronics
STM, -1.76%
Europe's largest chipmaker, late Thursday said first quarter revenue and margins were below forecasts. The company said it "experienced order push-outs in March relating to a number of its end markets."

Analysts said the weak dollar and price pressures also factored. "This confirms our fear that fragile wireless markets are fragile," Exane, a French broker said. "Nokia
NOK, +0.87%
and Alcatel
ALA, +0.09%
warned against inventories in the channel."

STM makes semiconductors used cell phones, digital music players, and cars. Shares in Paris (012970) dropped as much as 4 percent on Friday, leading volumes in the CAC-40 in the morning.

Also in the chip sector, UBS Warburg lowered its June quarter revenue estimate for bellwether Intel Corp.
INTC, +0.17%
to $6.54 billion from $6.65 billion, telling clients "we have reduced our assumptions regarding desktop processor units but have maintained our notebook processor expectations based on the new product launch of the Pentium M."

Meanwhile, the stock edged up 6 cents to $17.63.

In a second influential corporate report late Thursday, PeopleSoft
PSFT, +15.79%
warned it will miss first-quarter earnings and sales targets due to delayed purchases by its customers.

The stock slumped $1.63, or 9.7 percent, to $14.87. Shares of rivals Siebel Systems
SEBL
dropped 16 cents to $8 and SAP
SAP, +0.23%
was impacted with home-listed shares (716460) down as much as 4.3 percent to 73.26 euro.

"Obviously, the environment for capital spending worsened in Q1 with added concerns about the war and its impact on the already weakened economy," said Craig Conway, PeopleSoft's chief executive, in a statement.

Internet portal Yahoo
YHOO, +0.85%
gave up 64 cents, or 2.8 percent, to $23.70 after announcing it had priced a $750 million convertible offering. The notes, due 2008, will be convertible into Yahoo stock at $41 a share.

In other movers, shares of biotech Affymetrix
AFFX
tumbled $9.50, or 34 percent, to $18.50 early Friday after the maker of genetic research technology warned that first-quarter revenue and profit would be lower than expected.

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